The news from notes of the FOMC meeting of possibly, maybe, could be, sometime (you get the idea) … tapering off their bond purchases seemed to spook investors a couple weeks ago, and the market dropped 4%. Last week, FED Chairman Bernanke spoke about his desire to keep the bond buying program going until the end of 2013, in order to confirm the recovery is strong enough.
The market again reacted, this time it reached fresh gains and recovered what was lost by the wayward notes by what the committee had initially said a couple weeks ago.
Why in these warm summer months of beach going and grilling must we find something to keep us entertained? Have investors stooped so low that they need to read the notes of the Federal
Reserve board meeting and react in an irrational way? The answer appears to be yes. But behold this does not have to be you!
To me, it comes back to fundamentals. If you have ever coached or played any sport you know the key to a good/strong player is that person’s fundamentals. The fundamentals in terms of our economy are that the market is becoming strong enough to stand on its own feet. With unemployment dropping and housing the main driver of our recovery increasingly getting better, the economy has been on a steady climb up. The FED appears to be pulling out of the market for this reason.
Instead of obsessing about what the FED will do next, just know they are not supporting our economy because our economy is strengthening which is of course a good thing.
So go outside and enjoy the nice summer weather. There is no need to read the headlines and let The FED ruin your good time or better yet your financial plan.